Chipmakers Fret As Russia Limits Exports Of Noble Gases

The semiconductor industry can't seem to get a break. After dealing with pandemic-related supply constraints, chipmakers now face a new challenge: Russia, one of the world's largest suppliers of gases used in semiconductor manufacturing, has begun to limit exports.

Photo Insert: Neon, argon, and helium are used in the production of the tiny electronic chips found in a wide range of consumer products, from smartphones to washing machines to automobiles.

According to a report by Russian state news agency TASS, Moscow began restricting exports of inert, or "noble" gases such as neon, argon, and helium to "unfriendly" countries at the end of May, Anna Cooban and Uliana Pavlova reported for CNN Business. All three gases are used in the production of the tiny electronic chips found in a wide range of consumer products, from smartphones to washing machines to automobiles, and have been critically scarce for months.

It is one of President Vladimir Putin's latest salvos against countries that have imposed a slew of sanctions on Moscow in response to his assault on Ukraine.

According to consulting firm Bain & Company, prior to the war, Russia and Ukraine accounted for roughly 30% of the chip industry's supply of neon gas. The export restrictions come just as the semiconductor industry and its customers were beginning to recover from the worst of the supply crisis.

According to LMC Automotive, carmakers built 10 million fewer vehicles last year due to a chip shortage, but supplies were expected to improve in the second half of this year.

“What we don't need, obviously, is another drama with the chip supply that could affect and perhaps stall a recovery," said Justin Cox, director of global production at the automotive consultancy.

He told CNN Business that neon export limits were "worrying," but had not caught chipmakers off guard because the industry had been preparing for further supply disruptions from the region since Russia annexed Crimea from Ukraine eight years ago.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic